Question

On November 1, 20Y9, Lexi Martin established an interior decorating business, Heritage Designs. During the month, Lexi completed the following transactions related to the business:
Nov. 1 Lexi transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $50,000.
1 Paid rent for period of November 1 to end of month, $4,000.
6 Purchased office equipment on account, $15,000.
8 Purchased a truck for $38,500 paying $5,000 cash and giving a note payable for the remainder.
10 Purchased supplies for cash, $1,750.
12 Received cash for job completed, $11,500.
15 Paid annual premiums on property and casualty insurance, $2,400.
23 Recorded jobs completed on account and sent invoices to customers, $22,300.
24 Received an invoice for truck expenses, to be paid in November, $1,250.

Enter the following transactions on Page 2 of the two-column journal:
Nov. 29 Paid utilities expense, $4,500.
29 Paid miscellaneous expenses, $1,000.
30 Received cash from customers on account, $9,000.
30 Paid wages of employees, $6,800.
30 Paid creditor a portion of the amount owed for equipment purchased on November 6, $3,000.
30 Paid dividends, $2,500. how it do Journal

Answer 1

Answer:

Though the wording in the question is misplaced a bit, it is assumed that journal entries are required. Please refer to the explanation section below to find the entries.

Explanation:

To provide a better formatting to the answer, an excel sheet is attached illustrating the journal entries. Explanations to the entries are provided below.

(1) Lexi has provided capital to the company which would make the company increase its cash account (debit) and increase its equity (or common stock) account (credit)

(2) Rent was paid which is an expense requiring a debit increase to rent expense of 4,000 and a credit decrease to the cash account of the same amount

(3) The company has purchased office equipment, thereby increasing its equipment asset account (debit) and recording a liability (credit) which will be paid later

(4) The company purchased a truck, thereby increasing its vehicles asset account (debit). The purchase is financed by the asset cash (credit) and by recording a liability for the remainder (credit)

(5) Supplies are an asset which is increased (debit) against a decrease of cash (credit)

(6) The company completed a job which means it recording sales revenue (credit). Against this sales revenue, the company received cash (debit)

(7) Insurance is an expense which is therefore increased (debit) against a cash outlay (credit(

(8) Again, the company recorded sales (credit). Instead of receiving cash immediately, the company will receive it later which means it has to record an asset account known as accounts receivable (debit)

(9) Truck expenses would increase (debit). But, the cash outlay hasn't occurred yet so a liability is recorded (credit)

(10) Utilities expense would increase and cash would decrease by the same amount

(11) Miscellaneous expense would increase and cash would decrease by the same amount

(12) Sales had been made against accounts receivable. The accounts receivable accounts asset would now decrease and the cash asset would increase

(13) Wages expense would increase against a decrease of cash

(14) The accounts payable liability account against purchase of equipment would decrease proportionate to the decrease in cash

(15) Dividend expense would increase and cash account would decrease

To understand the entries explained above and the attached excel entries, note that the accounting equation (Assets = Liabilities + Capital) must match for every transaction. So each entry must be offset by another entry which is know as the principle of double entry of accounting.

Download xlsx